Summary 2006 WY 112

Summary of Decision issued September 6, 2006

[SPECIAL NOTE: This opinion uses the "Universal Citation." It was given an "official" citation when it was issued. You should use this citation whenever you cite the opinion, with a P.3d parallel citation. Please note when you look at the opinion that all of the paragraphs are numbered. When you pinpoint cite to a quote, you should cite to this paragraph number rather than to any page number. If you need assistance in putting together a citation using the Universal Citation form, please contact the Wyoming State Law Library for assistance.]

Summaries are prepared by Law Librarians and are not official statements of the Wyoming Supreme Court.

Case Name: Y-O Investments, Inc. v. Emken; Emken v. Y-O Investments, Inc.

Citation: 2006 WY 112

Docket Number: 05-168; 05-169

Appeal from the District Court of Platte County, the Honorable John C. Brooks, Judge

Representing Y-O Investments, Inc.: Frank J. Jones, Wheatland, Wyoming.

Representing Rose Emken: Cole N. Sherard and D.N. Sherard, Wheatland, Wyoming. Argument by Mr. Cole N. Sherard.

Issue: Emken: Whether the district court erred in finding that Y-O was not in default on the note and mortgage. Y-O: Whether the district court judge can award attorney fees when he found no default existed in the parties’ contract. Whether the district court can rewrite an unambiguous contract.

Holding: In an amended judgment and order following a bench trial in which neither party requested special findings as provided by W.R.C.P. 52(a), the district court ruled that Y-O Investments, Inc. (Y-O) did not breach the terms of a promissory note secured by a mortgage held by Rose Emken (Emken), but that Y-O must take several actions during the life of the note and mortgage to protect Emken’s position and must pay her attorney fees in the sum of $2,000.
Standard of Review: Because the case was bench tried and neither party requested findings of fact and conclusions of law, the Court must consider that the amended judgment and order carried with it every finding of fact which was supported by the evidence. The Court will not interfere with the trial court’s findings unless they are clearly erroneous or manifestly wrong and totally against the evidence. Both parties agreed that the terms of the promissory note and mortgage were unambiguous and therefore the interpretation of these terms is reviewed de novo. With respect to an appeal of an award of attorney fees, the parties agreed that the Court subscribe to the American rule, under which a prevailing party may be reimbursed for its attorney fees when express statutory or contractual authorization exists for such an award.
Y-O is a Wyoming corporation operating a real estate development company east of Wheatland. Emken bought a one-half interest in the company for $145,600 but after a few months, wanted out. Her payment was turned into a loan to the company as evidenced by the promissory note and mortgage. Emken signed partial releases which did not contain legal descriptions of the mortgaged property partially released. Y-O used the partial releases when a lot was sold, filling in the necessary legal description and paying Emken one-half the proceeds
as required by the terms of the promissory note. Emken was told that Y-O would use some of the partial releases to obtain financing from banks. During the first year after execution of the promissory note, some monthly interest payments were not timely made. But Y-O was current as of the date when Emken declared default in the payments.
The Court affirmed the trial court’s decision that Y-O did not default on the note and mortgage. No terms of the note and mortgage prohibited Y-O from obtaining and using Emken’s partial releases as it did. Y-O was current in its monthly interest payments and net sales proceeds payments.
The cross-appeal: Because the trial court found that Y-O was not in default, they question the trial court’s ordering it to identify for Emken which lots have been sold and which have not; to provide Emken a full and complete accounting of all business activities involving the mortgaged property; to make written requests through Emken’s attorney for future releases of lots being sold and to provide pertinent details about each lot sale; to maintain a sufficient amount of mortgaged property of a value of 150% of the then balance of principal and accrued interest on the note and mortgage; and to pay Emken the sum of $2,000 for her attorney fees. The trial court abused its discretion on several counts. By ruling that Y-O had not defaulted on the note and mortgage, Emken’s ancillary accounting claim was without legal basis because an accurate calculation of damages was unnecessary. By ruling that Y-O must perform the various requirements, including an accounting of business activities and sales, the trial court impermissibly rewrote the parties’ note and mortgage. By ruling that Y-O must pay attorney fees, the trial court impermissibly rewrote the parties’ note and mortgage which allowed attorney fees only in the event of default.

The Court affirmed the district court’s amended judgment and order which found that Y-O was not in default on the promissory note and mortgage. The Court reversed the amended judgment and order which imposed on Y-O requirements not contained in the promissory note and mortgage and which imposed on Y-O an attorney fee of $2,000 to Emken.

J. Golden delivered the order for the court.

Link to the case: http://tinyurl.com/ngypq .